SemiLEDs Reports Third Quarter Fiscal Year 2014 Financial Results

HSINCHU, Taiwan--(BUSINESS WIRE)--
SemiLEDs Corporation (NASDAQ: LEDS), "SemiLEDs" or the "Company," a
developer and manufacturer of LED chips and LED components, today
announced its financial results for the third quarter of fiscal year
2014, ended May 31, 2014.

Revenue for the third quarter of fiscal 2014 was $4.6 million, an 11%
increase compared to $4.2 million in the second quarter of fiscal 2014.
GAAP net loss attributable to SemiLEDs stockholders for the third
quarter of fiscal 2014 was $6.4 million, or a net loss of $0.23 per
diluted share, which is approximately flat compared to the second
quarter of fiscal 2014.

"We continue to be encouraged by the progress we have made in
reorienting our business toward more profitable segments of the LED
industry, such as UV and components, evidenced by our 11% sequential
revenue growth in the most recent quarter," said Trung Doan, Chairman,
President and CEO. "While we gain traction and grow our presence in
these markets, we remain focused on operational cost improvements to
lower our negative cash flow and accelerate our path to profitability,"
concluded Doan.

On a non-GAAP basis, net loss attributable to SemiLEDs stockholders for
the third quarter of fiscal 2014 was $5.9 million, or a net loss of
$0.21 per diluted share, which is approximately flat compared to the
second quarter of fiscal 2014.

GAAP gross margin for the third quarter of fiscal 2014 was negative 61%,
compared with gross margin for the second quarter of fiscal 2014 of
negative 75%. Operating margin for the third quarter of fiscal 2014 was
negative 138%, compared with negative 159% in the second quarter of
fiscal 2014. The sequential improvement in margins was due to higher
revenues, a shift in our product mix to higher margin products, and our
cost reduction efforts.

The Company's cash and cash equivalents were $16.1 million at the end of
the third quarter of fiscal 2014, compared to the second quarter
fiscal 2014 ending balance of $21.5 million. Cash used in operating
activities was $4.1 million in the third quarter of fiscal 2014.

Management's Prepared Remarks

In conjunction with the dissemination of this release, SemiLEDs will
post management's prepared remarks for its third fiscal quarter 2014
financial results on the Investors section of its website at http://investors.semileds.com/events.cfm.

About SemiLEDs

SemiLEDs develops and manufactures LED chips and LED
components primarily for general lighting applications, including street
lights and commercial, industrial and residential lighting, along with
specialty industrial applications such as ultraviolet (UV) curing,
medical/cosmetic, counterfeit detection, horticulture, architectural
lighting and entertainment lighting. SemiLEDs sells blue, white, green
and UV LED chips.

Non-GAAP Financial Measures

SemiLEDs has provided in this press release adjusted financial
information that has not been prepared in accordance with accounting
principles generally accepted in the United States of America, or GAAP.
SemiLEDs uses these non-GAAP financial measures internally in analyzing
its financial results and believes they are useful to investors, as a
supplement to, but not as a substitute for, GAAP measures, in evaluating
the Company's operational performance. SemiLEDs believes that the use of
these non-GAAP financial measures provides an additional tool for
investors to use in evaluating operating results and trends, and in
comparing its financial results with other companies in SemiLEDs'
industry, many of which present similar non-GAAP financial measures to
investors. The historical non-GAAP financial measures presented above
exclude the following items required to be included by GAAP: non-cash
stock-based compensation charges and the related tax effect, if any. In
addition to the non-GAAP financial measures discussed above, SemiLEDs
also uses free cash flow as a measure of operating performance. Free
cash flow represents cash provided by operating activities less capital
expenditures.

Non-GAAP financial measures should not be considered in isolation from,
or as a substitute for, financial information prepared in accordance
with GAAP. Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable GAAP financial
measures. A reconciliation of historic non-GAAP financial measures to
GAAP results has been provided in the financial statement tables
included in this press release.

Forward Looking Statements

This press release contains statements that may constitute
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and as defined in the U.S. Private
Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact could be deemed forward-looking,
including, but not limited to, any projections of future revenues,
income, margins or other financial information; any statements about
historical results that may suggest trends for SemiLEDs' business; any
statements of the plans, strategies and objectives of management for
future operations; any statements of expectation or belief regarding
recovery of the LED industry, market opportunities and other future
events or technology developments; any statements regarding SemiLEDs'
position to capitalize on any market opportunities; and any statements
of assumptions underlying any of the foregoing. These forward-looking
statements are based on current expectations, estimates, forecasts and
projections of future SemiLEDs' or industry performance based on
management's judgment, beliefs, current trends and market conditions and
involve risks and uncertainties that may cause actual results to differ
materially from those contained in the forward-looking statements.
SemiLEDs' Annual Report on Form 10-K filed with the Securities and
Exchange Commission (the "SEC") and other SemiLEDs filings with the SEC
(which you may obtain for free at the SEC's website at http://www.sec.gov)
discuss some of the important risks and other factors that may affect
SemiLEDs' business, results of operations and financial condition.
SemiLEDs undertakes no intent or obligation to publicly update or revise
any of these forward looking statements, whether as a result of new
information, future events or otherwise, except as required by law.

SEMILEDS CORPORATION

Unaudited Condensed Consolidated Balance Sheets

(In thousands of U.S. dollars)

May 31, 2014

February 28,2014

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

16,084

$

21,511

Accounts receivable, net

2,851

2,472

Accounts receivable from related parties, net

47

120

Inventories

9,756

10,809

Prepaid expenses and other current assets

1,597

1,975

Total current assets

30,335

36,887

Property, plant and equipment, net

27,329

28,384

Intangible assets, net

1,556

1,481

Goodwill, net

59

58

Investments in unconsolidated entities

2,239

2,220

Other assets

1,134

1,330

TOTAL ASSETS

$

62,652

$

70,360

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Current installments of long-term debt

$

2,060

$

2,115

Accounts payable

2,555

3,854

Accrued expenses and other current liabilities

4,223

4,577

Deferred income, current portion

51

51

Total current liabilities

8,889

10,597

Long-term debt, excluding current installments

4,673

5,145

Deferred income, net of current portion

301

314

Total liabilities

13,863

16,056

EQUITY:

SemiLEDs stockholders' equity

Common stock

—

—

Additional paid-in capital

170,538

170,046

Accumulated other comprehensive income

5,485

5,070

Accumulated deficit

(127,261

)

(120,856

)

Total SemiLEDs stockholders' equity

48,762

54,260

Noncontrolling interests

27

44

Total equity

48,789

54,304

TOTAL LIABILITIES AND EQUITY

$

62,652

$

70,360

SEMILEDS CORPORATION

Unaudited Condensed Consolidated Statements of Operations

(In thousands of U.S. dollars and shares, except per share data)

Three Months Ended

May 31, 2014

February 28, 2014

Revenues, net

$

4,615

$

4,171

Cost of revenues

7,408

7,308

Gross loss

(2,793

)

(3,137

)

Operating expenses:

Research and development

1,025

1,219

Selling, general and administrative

2,530

2,263

Total operating expenses

3,555

3,482

Loss from operations

(6,348

)

(6,619

)

Other income (expenses):

Equity in losses from unconsolidated entity

(22

)

(67

)

Interest expenses, net

(23

)

(1

)

Other income, net

53

52

Foreign currency transaction gains (losses), net

(81

)

207

Total other income (expenses), net

(73

)

191

Loss before income taxes

(6,421

)

(6,428

)

Income tax expense

—

—

Net loss

(6,421

)

(6,428

)

Less: Net loss attributable to noncontrolling interests

(16

)

(19

)

Net loss attributable to SemiLEDs stockholders

$

(6,405

)

$

(6,409

)

Net loss per share attributable to SemiLEDs stockholders:

Basic and diluted

$

(0.23

)

$

(0.23

)

Shares used in computing net loss per share attributable to SemiLEDs
stockholders: